How to incorporate
When any person wants to form a corporation, it is important for him to understand that the corporation is a separate unit from the persons who operate or own it. The person may operate all the stocks which are in the corporation and also he may be the only employee in that corporation which means it is a legal unit. A corporation is one of the state-law permitted legal formations where the business is a separate unit from its proprietors. As the corporation is said to be a legal unit, its operation procedures and organizations are administered by a specific state laws. And form state to state these laws are bound to vary but the corporate procedures and elements remain the same.
Basic Steps to Incorporate the Business
There are few basic steps to incorporate an existing or a proposed business and they are as follows: -
To Choose and Reserve a Corporate Name: - Using similar names by two or more corporations are been avoided from registering. So in order to avoid this problem it is important for an individual to check the name in advance. This is done by getting in touch with the state office such as Corporations Commissioner or Secretary of State. These state offices help with the information on how to reserve the proposed name and other related questions.
To Select A Corporation Type: - There are various kinds of corporations that offer different tax advantages and benefits. Persons can select form the various types of corporations such as the regular C corporation with unlimited shareholders, S corporation with limited shareholders and professional corporation with a group of lawyers or doctors etc. In order to know more about these corporation types one can consult the attorney or an accountant for more information.
To Create A Pre-Incorporation Agreement: - With the help of few shareholders one can plan to incorporate a small business where each and every person will be a part of day to day business. Even though it is not necessary the pre-incorporation agreement can be very handy at the time of commencing a new corporation. Some of the points that should include in the agreement are the name of the corporate, all the names of the shareholders, purpose of the corporate, the name of the state where this corporate is to be established, status of the tax, number of stocks and the stock subscriptions.
To Prepare and File Articles of Incorporation: - A person can initiate the procedure of incorporation by organizing all the articles of Incorporation. He can organize all the incorporation documents by stating certain elements such as who are the Incorporators and numbers of shares of stock which is to be held by shareholders. But before doing this he must get informations regarding the laws that govern corporations in his state.
To Prepare Corporate Bylaws: - Corporate Bylaws are the rules and regulations of the corporate life under the states laws. It also allows owners to fill up certain rules which are left to their judgment like rules for calling & conducting shareholders or directors meetings and the number of members on the board of directors.
To Issue Shares of Stock: - The concluding stage of incorporation takes place when the owner files a notice of stock issuance with Department of Corporations. The owner cannot register issuance of stock with the Federal Securities &; Exchange Commission unless his corporation is not qualified for exemption.
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